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Sales Tax in Tennessee: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Tennessee has one of the highest combined sales tax rates in the nation, a direct consequence of having no state income tax. The 7.00% state rate is the joint-highest in the country, and when combined with local taxes, rates frequently exceed 9.5%. Tennessee is also one of the few states that taxes groceries, though at a reduced state rate of 4.00%.

Tennessee Sales Tax Rates (2026)

Component	Rate
State rate (general merchandise)	7.00%
State rate (food and food ingredients)	4.00%
Local tax range	1.50% — 2.75%
Average combined (state + local)	~9.55%
Highest combined rate	~9.75%

Combined Rates by Major City

City	Combined Rate (General)	Combined Rate (Groceries)
Nashville	9.25%	6.25%
Memphis	9.75%	6.75%
Knoxville	9.25%	6.25%
Chattanooga	9.25%	6.25%
Clarksville	9.50%	6.50%
Murfreesboro	9.75%	6.75%
Franklin	9.25%	6.25%
Jackson	9.75%	6.75%

How Tennessee Sales Tax Works

State and Local Components

Tennessee’s 7.00% state rate on general merchandise is among the highest in the nation. Local jurisdictions (counties and cities) may impose an additional local option tax, typically 2.25% to 2.75%. The state caps the combined local rate at 2.75%.

The reduced 4.00% state rate on food and food ingredients applies to grocery items only. Local taxes are added on top of the reduced state rate, so the combined grocery rate ranges from approximately 5.50% to 6.75% depending on location.

Single Article Tax Cap

Tennessee imposes a cap on the state sales tax for a single article priced over $1,600. For the amount exceeding $1,600, the state rate is reduced to 2.75% (instead of 7.00%). Local taxes still apply to the full amount. This cap primarily benefits purchasers of vehicles, boats, and other high-value items.

Example: A vehicle purchased for $40,000 in Nashville:

First $1,600: $112.00 (7.00% state) + $36.00 (2.25% local) = $148.00
Remaining $38,400: $1,056.00 (2.75% state) + $864.00 (2.25% local) = $1,920.00
Total: ~$2,068.00 (effective rate of ~5.17%)

What Is Taxable and What Is Exempt

Reduced Rate (4.00% state + local)

Food and food ingredients for home preparation (including meat, produce, dairy, canned goods, baked goods)

Full Rate (7.00% state + local)

Prepared food and restaurant meals
Candy and soft drinks
Clothing and footwear (no exemption)
Electronics, furniture, appliances, and general merchandise
Digital products: Tennessee taxes specified digital products including music, movies, ebooks, and software downloads.

Exempt

Prescription medications
Certain agricultural products (with valid exemption)
Industrial machinery (qualifying purchases for manufacturing)
Motor vehicle trade-in credits (only the difference after trade-in is taxed)

Sales Tax Holiday

Tennessee holds an annual sales tax holiday (typically the last full weekend in July) exempting:

Clothing priced at $100 or less per item
School and art supplies priced at $100 or less per item
Computers priced at $1,500 or less

Comparison to National Average

Metric	Tennessee	National Average
State base rate	7.00%	~5.09%
Average combined rate	~9.55%	~6.60%
Grocery tax	4.00% state + local	~32 states exempt
Clothing exemption	No (except holiday)	~8 states

Tennessee has one of the highest combined sales tax rates in the country. The grocery tax, even at the reduced rate, is a significant cost for families — a household spending $800/month on groceries pays approximately $400—$540/year in grocery sales tax, depending on location.

Tips for Minimizing Tennessee Sales Tax Impact

Take advantage of the sales tax holiday. The annual back-to-school weekend saves families real money. At 9.25%—9.75%, a $500 shopping trip saves $46—$49 in tax.
Be aware of the grocery tax. While 4.00% is lower than the general rate, it still adds up. Tennessee is one of only a handful of states that taxes groceries. Budgeting for the ~5.5%—6.75% combined grocery rate helps avoid surprises.
Use the single article cap for big-ticket purchases. Vehicles, boats, and large appliances benefit from the reduced 2.75% state rate on amounts over $1,600. This effectively lowers the tax on expensive items.
Deduct sales tax on your federal return. With no state income tax, Tennessee residents should elect the sales tax deduction on Schedule A if itemizing. Given the high rates, this deduction is often more valuable than for residents of lower-rate states.
Shop across state lines when practical. Some border areas may have access to lower combined rates in neighboring states. However, Tennessee’s use tax applies to out-of-state purchases brought into Tennessee.
Understand the prepared food distinction. Heated food, food sold with eating utensils, and food sold in restaurants are taxed at the full 7.00% state rate rather than the reduced grocery rate.

Key Takeaways

Tennessee’s 7.00% state rate is the joint-highest in the nation, with combined rates averaging ~9.55%
Groceries are taxed at a reduced 4.00% state rate, but local taxes push the combined grocery rate to ~5.5%—6.75%
The single article tax cap reduces the effective rate on purchases over $1,600
An annual sales tax holiday provides relief on clothing, school supplies, and computers
With no state income tax, sales tax is the primary state revenue source and the federal sales tax deduction is especially valuable
Clothing is fully taxable year-round outside of the sales tax holiday

Next Steps

See the full Tennessee tax picture at Taxes in Tennessee: State Tax Guide 2026
Compare all states at State Income Tax Rates Comparison 2026
Calculate your federal bracket with the Tax Bracket Calculator 2026
Explore deductions at Tax Deductions You’re Probably Missing
Get local help: Find a CPA Near You